The NFT market is getting bigger and bigger. In the first quarter of 2022, the trading volume on the two largest NFT trading platforms already amounted to USD 116 billion.
However, the taxation of trading in NFTs has still not been clarified in Germany either by the tax authorities or by case law. In particular, it is unclear when trading in NFTs is to be classified as commercial within the meaning of income tax law.
The tax consequences of being classified as a commercial NFT trader are considerable.
The basic criteria for commercial activity are independence, sustainability, intention to make a profit and participation in general economic activity.
The decisive factor in deciding whether an activity is of a commercial nature or not is the question of whether the action has already exceeded the scope of private asset management. In the case of securities transactions, this question has been asked for many decades. The criteria developed in this context are also suitable for clarifying whether an NFT investor is engaged in commercial activities:
Essentially, it is always a question of whether the investor already acts like a trader, i.e. whether he makes use of third parties (labor), maintains office space and/or another professional organization, engages in marketing, professionally prices and sells his "goods", finances his transactions externally, invests a particularly large amount of working time, also offers his investments to third parties, his investments are geared to the turnover of NFTs (flipping), etc. - or whether his behavior resembles that of a classic passive investor who merely takes the normal price risks inherent in any private financial investment and tends to follow more of a HODL approach.
The decision must be made taking into account the totality of all circumstances and also always depends on the personal financial circumstances.
The question of commerciality of NFT trading in Germany is always decided by your very specific circumstances. We will gladly support you by
Are you about to expand extensively? Do you fear that you have already entered the commercial sphere? Are you thinking about taking the step towards commerciality or towards a trading limited liability company? Then contact us! Our experienced tax advisors and tax lawyers will be happy to assist you. Your contact persons are
The easiest way to reach us is via our contact form for taxation of crypto assets or alternatively via e-mail (firstname.lastname@example.org) or phone (+49 69 76 75 77 80). So do not hesitate and get in touch with us!